question

The chart of accounts is a special ledger used in accounting systems.

answer

True

question

In the first month of operations, the total of the debit entries to the Cash account amounted to $1,000 and the total of the credit entries to the Cash account amounted to $600. The Cash account has a

answer

400 Debit Balance

question

The normal balance of all accounts is a debit.

answer

False

question

Transactions are entered in the ledger accounts and then transferred to journals.

answer

False

question

The Unearned Service Revenue account is classified as a(n)

answer

Liability

question

Posting

answer

accumulates the effects of journalized transactions in the individual accounts.

question

The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

answer

False

question

Revenue increases stockholders' equity and should be recorded whenever cash is received from customers.

answer

False

question

Barnes Company showed the following balances at the end of its first year: Cash $14,000 Prepaid insurance 700 Accounts receivable 3,500 Accounts payable 2,800 Notes payable 4,200 Common stock 5,400 Dividends 700 Revenues 24,000 Expenses 17,500 What did Barnes Company show as total credits on its trial balance?

answer

36400

question

At September 1, 2014, Kern Enterprises reported a cash balance of $70,000. During the month, Kern collected cash of $30,000 and made disbursements of $50,000. At September 30, 2014, the cash balance is

answer

50,000 Debit

question

Entering transactions into the journal is called posting.

answer

False

question

The purchase or sale of long-lived assets used in operating the business is

answer

investing activity

question

During 2014, its first year of operations, Jane's Bakery had revenues of $65,000 and expenses of $33,000. The business paid cash dividends of $18,000. What is the balance in Retained Earnings at December 31, 2014?

answer

14000 Credit

question

If a monthly cash budget is prepared properly, there will never be a cash deficiency at the end of any month.

answer

False

question

Under the concept of establishment of responsibility, how many people should have the ultimate responsibility?

answer

only one individual

question

The following credit sales are budgeted by Gonzalez Company: January $102,000 February 150,000 March 210,000 The company's past experience indicates that 80% of the accounts receivable are collected in the month of sale, 20% in the month following the sale. The anticipated cash inflow for the month of March i

answer

198,000

question

Which of the following items on a bank reconciliation would require an adjusting entry on the company's books?

answer

A bank service charge.

question

All of the following are true regarding the management and monitoring of cash except

answer

the cash to cash operating cycle for a manufacturer is generally shorter than that of a merchandising company.

question

Management of cash is the responsibility of the company

answer

Treasurer

question

The most important element of the fraud triangle is rationalization.

answer

False

question

In order to prevent a transaction from being recorded more than once, a company should maintain only one book of original entry.

answer

False

question

Which of the following is an appropriate internal control activity for cash?

answer

The amount of cash on hand should be kept to a minimum.

question

Which of the following is not an internal control activity for cash?

answer

The functions of record keeping and maintaining custody of cash should be combined.

question

Karlin Company gathered the following reconciling information in preparing its April bank reconciliation: Cash balance per books, 4/30 $13,200 Deposits in transit 1,800 Notes receivable and interest collected by bank 4,440 Bank charge for check printing 150 Outstanding checks 9,000 NSF check 840 The adjusted cash balance per books on April 30 is

answer

$13,200 + $4,440 - $150 - $840 = $16,650

question

Which one of the following sections would not appear on a cash budget?

answer

Investing

question

The following information was taken from Mitchell Company cash budget for the month of July: Beginning cash balance $100,000 Cash receipts 96,000 Cash disbursements 136,000 If the company has a policy of maintaining end of the month cash balance of $100,000, the amount the company would have to borrow is

answer

40000

question

Which of the following would be added to the balance per books on a bank reconciliation?

answer

Notes collected by the bank.

question

Adler Company developed the following reconciling information in preparing its December bank reconciliation: Cash balance per bank, 12/31 $20,000 Note receivable collected by bank 10,000 Outstanding checks 15,000 Deposits in transit 7,500 Bank service charge 125 NSF check 2,000 Using the above information, determine the cash balance per books (before adjustments) for the Adler Company.

answer

($20,000 - $15,000 + $7,500) - $10,000 + $125 + 2,000 = $4,625

question

Wilton sells softball equipment. On November 14, they shipped $3,000 worth of softball uniforms to Paola Middle School, terms 2/10, n/30. On November 21, they received an order from Douglas High School for $1,800 worth of custom printed bats to be produced in December. On November 30, Paola Middle School returned $300 of defective merchandise. Wilton has received no payments from either school as of month end. What amount will be recognized as net accounts receivable on the balance sheet as of November 30?

answer

2700

question

In 2014 Wilkinson Company had net credit sales of $1,500,000. On January 1, 2014, Allowance for Doubtful Accounts had a credit balance of $36,000. During 2014, $60,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $400,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2014?

answer

64000

question

If a company fails to record estimated bad debts expense,

answer

expenses are understated.

question

Using the allowance method, the uncollectible accounts for the year are estimated to be $40,000. If the balance for the Allowance for Doubtful Accounts is a $9,000 credit before adjustment, what is the balance after adjustment?

answer

40000

question

Which of the following would probably be the most significant type of a claim held by a company?

answer

Accounts receivable

question

When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by 360 days.

answer

False

question

Receivables are valued and reported in the balance sheet at their gross amount less any sales returns and allowances and less any cash discounts.

answer

False

question

The term "receivables" refers to

answer

amounts due from individuals or companies.

question

The return on assets ratio can be computed from the profit margin ratio and the asset turnover ratio.

answer

True

question

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

answer

False

question

Capital expenditures are expenditures that increase the company's investment in productive facilities.

answer

True

question

If an acquired franchise or license is for an indefinite time period, then the cost of the asset should not be amortized.

answer

True

question

A loss on disposal of a plant asset as a result of a sale or a retirement is calculated in the same way as a gain on disposal.

answer

True

question

A company purchased land for $84,000 cash. Real estate brokers' commission was $5,000 and $7,000 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from salvage of the demolished building was $1,200. Under the historical principle, the cost of land would be recorded at

answer

94,800

question

Ryan, Inc. purchased a delivery truck with a $42,000 list price. The company was given a $4,200 cash discount by the dealer, and paid $2,100 sales tax. Annual insurance on the truck is $1,050. As a result of the purchase, by how much will Ryan, Inc. increase its truck account?

answer

39,900

question

In calculating depreciation, both plant asset cost and useful life are based on estimates.

answer

False

question

Expenditures that add to the utility of plant assets for more than one accounting period are

answer

capital expenditures.

question

Depreciation is a process of

answer

Cost Allocation

question

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n)

answer

Systematic and rational manner

question

On November 1, 2013, Love Company places a new asset into service. The cost of the asset is $45,000 with an estimated 5-year life and $5,000 salvage value at the end of its useful life. What is the depreciation expense for 2014 if Love Company uses the straight-line method of depreciation?

answer

8,000

question

Mitchell Corporation bought equipment on January 1, 2014 .The equipment cost $180,000 and had an expected salvage value of $30,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

answer

150,000

question

The book value of a plant asset is the difference between the

answer

cost of the asset and the accumulated depreciation to date.

question

An expenditure for which of the following items would be considered a revenue expenditure?

answer

Ordinary repair

question

In computing depreciation, salvage value is

answer

an estimate of a plant asset's value at the end of its useful life.

question

Equipment that cost $54,000 and on which $30,000 of accumulated depreciation has been recorded was disposed of for $27,000 cash. The entry to record this event would include a

answer

Gain of 3,000

question

Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The book value of the machine at the beginning of the third year would be

answer

96,000

question

Each bondholder may vote for the board of directors in proportion to the number of bonds held.

answer

False

question

Notes payable usually require the borrower to pay interest.

answer

True

question

Unearned revenues are received before goods are delivered or services are rendered.

answer

True

question

A company receives $176, of which $16 is for sales tax. The journal entry to record the sale would include a

answer

credit to Sales Taxes Payable for $16.

question

Gomez Corporation issues 600, 10-year, 8%, $1,000 bonds dated January 1, 2014, at 96. The journal entry to record the issuance will show a

answer

debit to Cash for $576,000.

question

The interest charged on a $250,000 note payable, at the rate of 6%, on a 90-day note would be

answer

3,750

question

The following totals for the month of April were taken from the payroll records of Metz Company.

answer

debit to Salaries and Wages Payable for $19,905.

question

The following totals for the month of April were taken from the payroll records of Noll Company. Salaries $60,000 FICA taxes withheld 4,590 Income taxes withheld 12,500 Medical insurance deductions 2,250 Federal unemployment taxes 160 State unemployment taxes 1,080 The journal entry to record the monthly payroll on April 30 would include a

answer

debit to Salaries and Wages Expense for $60,000.

question

The following totals for the month of April were taken from the payroll records of Noll Company. Salaries $60,000 FICA taxes withheld 4,590 Income taxes withheld 12,500 Medical insurance deductions 2,250 Federal unemployment taxes 160 State unemployment taxes 1,080 The entry to record accrual of employer's payroll taxes would include a

answer

debit to Payroll Tax Expense for $5,830.

question

Morgan Company does not ring up sales taxes separately on the cash register. Total receipts for February amounted to $25,440. If the sales tax rate is 6%, what amount must be remitted to the state for February's sales taxes?

answer

1440

question

Sales taxes collected by a retailer from a customer are expenses

answer

of the customers

question

Bonds with a face value of $300,000 and a quoted price of 97¼ have a selling price of

answer

$291,750.

question

Moss County Bank agrees to lend the Sadowski Brick Company $300,000 on January 1. Sadowski Brick Company signs a $300,000, 6%, 9-month note. The entry made by Sadowski Brick Company on January 1 to record the proceeds and issuance of the note is

answer

Cash 300,000 Notes Payable 300,000

question

Moss County Bank agrees to lend the Sadowski Brick Company $300,000 on January 1. Sadowski Brick Company signs a $300,000, 6%, 9-month note. What is the adjusting entry required if Sadowski Brick Company prepares financial statements on June 30?

answer

Interest Expense 9,000 Interest Payable 9,000

question

Two sisters operate a bed and breakfast on the coast of Maine. As customers make reservations they are required to pay cash in advance equal to one-half of the rate for their stay. How should the sisters account for the cash received as reservations are made?

answer

Cash Unearned Service Revenue

question

If bonds sell at a premium, the interest expense recognized each year will be greater than the bond interest paid.

answer

False

question

Very often, failure to record a liability means failure to record a(n)

answer

Expense

question

What is the total stockholders' equity based on the following account balances? Common Stock $1,800,000 Paid-In Capital in Excess of Par 120,000 Retained Earnings 570,000 Treasury Stock 60,000

answer

2,430,000

question

All of the following statements regarding retained earnings are true except

answer

retained earnings represents a claim on cash.

question

Which of the following statements is not true about a 2-for-1 split?

answer

Total contributed capital increases.

question

The net effects on the corporation of the declaration and payment of a cash dividend are to

answer

decrease assets and decrease stockholders' equity.

question

Which of the following is the appropriate general journal entry to record the declaration of cash dividends?

answer

Cash Dividends Dividends Payable

question

Logan Corporation issues 50,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $3,000,000 and a credit or credits to

answer

Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $500,000.

question

Which of the following is not a right or preference associated with preferred stock?

answer

The right to vote.

question

The number of shares of issued stock equals

answer

outstanding shares plus treasury shares.

question

Treasury Stock is a(n)

answer

contra stockholders' equity account.

question

Which of the following statements about treasury stock is true?

answer

Purchasing treasury stock is done to eliminate hostile shareholder buyouts.

question

Which of the following represents the largest number of common shares?

answer

Authorized shares.

question

If common stock is issued for an amount greater than par value, the excess should be credited to

answer

Paid-in Capital in Excess of Par Value.

question

If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account

answer

Paid-in Capital in Excess of Par Value will be credited for $120,000.

question

Par value

answer

is the value assigned per share in the corporate charter.

question

Which of the following statements reflects the transferability of ownership rights in a corporation?

answer

A stockholder may dispose of part or all of his shares.

question

The two ways that a corporation can be classified by ownership are

answer

publicly held and privately held.

question

The two ways that a corporation can be classified by purpose are

answer

profit and not-for-profit.

question

Under the corporate form of business organization

answer

the corporation's life is stipulated in its charter.

question

Zoum Corporation had the following transactions during 2014: 1. Issued $125,000 of par value common stock for cash. 2. Recorded and paid wages expense of $60,000. 3. Acquired land by issuing common stock of par value $50,000. 4. Declared and paid a cash dividend of $10,000. 5. Sold a long-term investment (cost $3,000) for cash of $3,000. 6. Recorded cash sales of $400,000. 7. Bought inventory for cash of $160,000. 8. Acquired an investment in Zynga stock for cash of $21,000. 9. Converted bonds payable to common stock in the amount of $500,000. 10. Repaid a 6 year note payable in the amount of $220,000. What is the net cash provided by operating activities? $305,000. $180,000. $290,000. $240,000.

answer

$180,000. (Solution: $400,000 - $160,000 - $60,000 = $180,000)

question

The primary purpose of the statement of cash flows is to

answer

provide information about the cash receipts and cash payments during a period.

question

Generally, the most important category on the statement of cash flows is cash flows from

answer

Operating Activities

question

Assume that the Quinn Corporation uses the indirect method to depict cash flows. Indicate where, if at all, interest paid on note would be classified on the statement of cash flows.

answer

Operating Activities Section

question

Assume that the Quinn Corporation uses the indirect method to depict cash flows. Indicate where, if at all, stock issued for equipment would be classified on the statement of cash flows.

answer

Does not represent a cash flow.

question

Assume that the E-Zip Corporation uses the indirect method to depict cash flows. Indicate where, if at all, common stock issued for cash would be classified.

answer

Financing activities section

question

On the statement of cash flows, the cash flows from operating activities section would include

answer

cash receipts from sales activities.

question

Zoum Corporation had the following transactions during 2014: 1. Issued $125,000 of par value common stock for cash. 2. Recorded and paid wages expense of $60,000. 3. Acquired land by issuing common stock of par value $50,000. 4. Declared and paid a cash dividend of $10,000. 5. Sold a long-term investment (cost $3,000) for cash of $3,000. 6. Recorded cash sales of $400,000. 7. Bought inventory for cash of $160,000. 8. Acquired an investment in Zynga stock for cash of $21,000. 9. Converted bonds payable to common stock in the amount of $500,000. 10. Repaid a 6 year note payable in the amount of $220,000. What is the net cash provided by operating activities?

answer

180,000

question

Zoum Corporation had the following transactions during 2014: 1. Issued $125,000 of par value common stock for cash. 2. Recorded and paid wages expense of $60,000. 3. Acquired land by issuing common stock of par value $50,000. 4. Declared and paid a cash dividend of $10,000. 5. Sold a long-term investment (cost $3,000) for cash of $3,000. 6. Recorded cash sales of $400,000. 7. Bought inventory for cash of $160,000. 8. Acquired an investment in Zynga stock for cash of $21,000. 9. Converted bonds payable to common stock in the amount of $500,000. 10. Repaid a 6 year note payable in the amount of $220,000. What is the net cash provided by financing activities?

answer

$. (Solution: $125,000 - $10,000 - $220,000 = ($105,000))

question

Zoum Corporation had the following transactions during 2014: 1. Issued $125,000 of par value common stock for cash. 2. Recorded and paid wages expense of $60,000. 3. Acquired land by issuing common stock of par value $50,000. 4. Declared and paid a cash dividend of $10,000. 5. Sold a long-term investment (cost $3,000) for cash of $3,000. 6. Recorded cash sales of $400,000. 7. Bought inventory for cash of $160,000. 8. Acquired an investment in Zynga stock for cash of $21,000. 9. Converted bonds payable to common stock in the amount of $500,000. 10. Repaid a 6 year note payable in the amount of $220,000. What is the net cash provided by investing activities?

answer

($18,000). (Solution: $3,000 - $21,000 = ($18,000))

question

Accounts receivable arising from sales to customers amounted to $80,000 and $70,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $212,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

answer

$222,000.

question

If accounts payable have increased during a period

answer

expenses on an accrual basis are greater than expenses on a cash basis.

question

Which of the following would be subtracted from net income using the indirect method?

answer

An increase in accounts receivable.

question

In preparing the statement of cash flows, determining the net increase or decrease in cash requires the use of

answer

a comparative balance sheet.

question

The current cash debt coverage is used to evaluate

answer

liquidity

question

Lake Norman Company reported net income of $225,000 for the current year. Depreciation recorded on buildings and equipment amounted to $75,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $20,000 $15,000 Accounts receivable 22,000 32,000 Inventory 50,000 60,000 Accounts payable 12,000 18,000

answer

314000

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